Inverted hammer

Good morning, friends! Its mid-Feb already!!!

True enough, market decided not to take sides on Friday ahead of the G20 summit over the weekend. Now here's where it got tricky..... for one moment, I thought we will fall into Scenario 1 as outlined in "G20 can spring surprises, 15 Feb 13" where a weekly close +/- 5pips around 1.3362 would send a bullish message. But we closed at 1.3355. Nonetheless, I thought E$ could open the new week firmer above the WMA100 (1.3357) on the back of positive message out of the summit but it didn't and we are now hovering just below the resistance (that is a bearish signal). On the bullish side, if we go back to basics, then the weekly inverted hammer pattern should support a reversal story for the E$ after 2 weeks of correction down to 1.3305 low so far. If market recaptures the 1.3350/60 pivot, the bears have to be careful as market would target 1.3500/10 again. For today, the Chinese are finally back from their CNY holiday but the US will be out for Presidents Day.

CFTC COT report: Speculative accounts trimmed its net euro long positions to +24,181 vs +37,952 (-36%). Net JPY short decreased to -61,306 vs -68,413. Psychologically speaking, the inverse relationship may be in favour of the euro bulls.

Asian order book:
Stop loss: 1.3265/60, 1.3295/90 and 1.3405
Limit: 1.3250 and 1.3265

Technically, we are close to intraday o/s levels. However, intraday oscillator indicators are showing a mixed bag of signals. Market may not be ready to take side today and I expect further consolidation within 1.3290/3310 to 1.3400/20. If I have to make a call today, I'll still buy on dips with 2 levels of stops below 1.3280 and 1.3245.

E$ Weekly chart - Staying below the WMA100 & 200

XAUUSD
In my blog on "'V' shaped recovery", 6 Feb 13, I shared with all on my bearish view of the AUDUSD. Concomitantly, the yellow metal cannot escape the high correlation. Just last week, it closed below the WMA100, a technical event that we have not seen for the past 4 years. With that, the probability of XAUUSD heading into $1,500/1,4000 is higher than $1,700/1,800 in the month ahead. In short, yes, I am bearish XAUUSD for now.

XAUUSD Weekly chart - A rare visit below WMA100